THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING

Lobbyist’s job was no-show, state says

Position bumped up McDonough pension

Richard McDonough was director of public affairs and government relations for an education collaborative. Richard McDonough was director of public affairs and government relations for an education collaborative. (Aram Boghosian for The Globe)
By Andrea Estes
Globe Staff / June 21, 2011

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Lobbyist Richard W. McDonough was making hundreds of thousands of dollars a year, but according to the state’s inspector general, he wanted more.

So McDonough arranged for a client to give him a no-show, no-work job on a public payroll, allowing him to get medical benefits and a state pension he was not entitled to, said Inspector General Gregory W. Sullivan.

“It was literally a no-show job,’’ Sullivan wrote yesterday to the State Board of Retirement. “Mr. McDonough’s purported full-time employment at this public agency is a sham.’’ His pension defrauds the state retirement system, Sullivan said.

He asked the Retirement Board to review the $31,000-a-year lifetime pension, which McDonough started collecting in 2008 as the Globe was scrutinizing his involvement in a questionable effort to steer multimillion-dollar state contracts to a Burlington software firm in exchange for cash. He was convicted last week on federal conspiracy and fraud charges with his friend, former House Speaker Salvatore F. DiMasi, for his efforts on behalf of Cognos.

To qualify for the pension, McDonough had a lobbying client, the Merrimack Education Center of Chelmsford, put him on the payroll of a related organization, the Merrimack Education Collaborative, which provides education and treatment services for special-needs students from 10 school districts.

McDonough was described in internal records as the Education Collaborative’s director of public affairs and government relations from 2003 to 2008. But virtually no one knew McDonough was on the payroll, not the co-executive directors nor any of the employees. He had no desk, no phone, and no work product, according to Sullivan.

The job appears to be a paperwork maneuver that allowed McDonough to receive public benefits while remaining a private lobbyist. He collected the same lobbying fees as before, but the Education Collaborative classified the payments as an employee’s salary so that they counted toward increasing McDonough’s pension.

Only the former executive director, John Barranco, who put McDonough on the payroll, seemed to know about the arrangement. Barranco refused to be interviewed by Sullivan’s investigators. He did not return calls yesterday from the Globe.

McDonough’s lawyer, Thomas Drechsler, said yesterday that his client did nothing illegal or improper.

“To the extent anyone is making such allegations, he vehemently denies them,’’ Drechsler said. “I want to remind people that the inspector general has never contacted him to hear his side of the story. They’ve never given him the opportunity to speak with them. I wonder about the quality of the investigatory process.’’

A spokesman for the inspector general said the findings were part of a larger investigation and the office does not interview every person involved.

While McDonough was supposedly a regular employee of the collaborative, he was also collecting lobbying fees from a dozen other clients. In 2008, for example, he reported earning more than $1.1 million from 13 companies.

By becoming a state employee, McDonough received health benefits from the collaborative and earned service toward the pension. When he applied for benefits at age 63 in December 2008, he added the five years and two months he was on the collaborative’s payroll to service he had with the state decades ago: summer jobs with the Metropolitan District Commission in the 1960s and nine years at the Department of Commerce in the 1970s and early 1980s.

The pension was calculated using all 17 years of service and his top three years of earnings in the collaborative job, averaging $96,115. As a result of those maneuvers, he roughly quadrupled the pension he would otherwise have qualified for.

If he had filed for a pension based only on his earlier employment by the state, his benefit would have been between $7,000 and $8,500 a year, depending on the option he chose for payment.

(His full pension is $37,581, but he chose to receive a lower monthly amount so his wife could collect a survivor benefit when he dies. He is eligible for a cost-of-living increase in July.)

Drechsler said that his client was paid legitimately and that as long as McDonough reported his income, it does not matter whether he was paid by the collaborative or the center.

“Regardless of whether you’re part time or full time, if you’re a lobbyist, you have to register,’’ Dreschler said. “The fact he was on the payroll and registered as their lobbyist are not inconsistent.’’

State Treasurer Steve Grossman said the matter will come before the State Retirement Board at its June 30 meeting.

“If Mr. McDonough has defrauded the state retirement system, we’ll take every step possible to protect public money,’’ Grossman said.

Unlike DiMasi, McDonough would not stand to lose his pension solely because of his federal corruption conviction. The Retirement Board generally rescinds pensions of convicted public employees only if their crime was related to their job.

McDonough could face the loss of his benefits or even criminal prosecution if the board rules if the benefits were obtained fraudulently. Pension applicants sign documents under the pains and penalties of perjury.

McDonough is facing up to 12 years in prison or more when he is sentenced on the federal charges in August.

McDonough, whose roster of clients has dwindled since the Cognos scandal broke in 2008, was once one of Beacon Hill’s top earners, especially after DiMasi was elected speaker in 2004, according to reports filed with the secretary of state’s office.

This year, he reported representing two clients, Anheuser-Busch and Insurance Auto Auctions, both based out of state. Last year, he reported earning $174,000 from three clients. A woman who answered the phone yesterday at Insurance Auto Auctions but refused to give her name said McDonough is still the group’s lobbyist, but added that she was unaware of his conviction.

Andrea Estes can be reached at estes@globe.com.